Wednesday, August 24, 2011

MediaNews Group consolidates its Bay Area holdings; Build them up, tear them down: only newspapers demonstrate the ability to destroy their own franchises

For those who worked in the Bay Area newspaper business, yesterday's news that MediaNews Group would take their multiple brand Bay Area newspaper franchise and convert it into a couple of generic regional newspapers was long in coming. One wondered why the company, which never really appreciated the gold mine they were sitting on, hadn't closed down all those newspaper titles long ago.

The details are as expected: The Oakland Tribune and the adjoining papers will become the East Bay Tribune; the Contra Costa Times and papers south into the San Ramon Valley and into eastern Alameda will be called the Times; and the San Mateo County Times will get rolled up into the San Jose Mercury News.

I once worked at one of these newspaper titles – actually a title that, as I will explain more about below, was closed down long ago. I was there when the brands were growing and making millions of dollars of profits for its owner.

It would easy to explain yesterday's news as yet another example of the newspaper business being unable to compete in a new digital world, but the fact is that none of yesterday's news has anything to do with the Internet. That would be too easy an explanation.

Once, long ago, there were two family owned newspaper groups that competed against each on the edges, and competed with big dailies more directly. One chain, owned by Floyd Sparks, controlled that part of the suburban market that touched the bay, east of San Francisco, but just south of Oakland. Another, owned by Dean Lesher, was growing like gangbusters out in Contra Costa County, growing east, north and south as new home and retail was being developed.

The two chains met in the Dublin/Pleasanton/Livermore area - the fringes for both groups, but fertile area due to its high demographics and growing retail base. One paper, The Valley Times, had just gone to seven day delivery – that was the paper that recruited me to move up from Los Angeles.

Each paper had its own approach to publishing, each had its merits, but eventually The Valley Times became the number one paper. Then Dean Singleton came in and bought out the Sparks papers in another move to acquire a family owned chain in order to slice it down to size to maximize profits. Things got even easier for us at The Valley Times – that is until the old man died.

At that point the chain was run by a brown-nosed, charismatic fool who had worked his way up the corporate ladder high enough to take his revenge on anyone who didn't kiss the ring. (I was one of those who wasn't going to kiss the ring, so off to McGraw-Hill for me.)

What happened next, some twenty years ago, and still well before the Internet boom, is what spelled the end to the family of Bay Area newspapers. Through media consolidation the Lesher chain was bought first by McClatchy, then by Singleton's company, MediaNews Group, which owns them all now.

The Valley Times, which had grown to number one and was linked to the more affluent Contra Costa County, was closed down to create a monopoly for the other paper. Staff sizes were reduced, revenue and circulation growth stopped. And then the Internet boom took place.

"We are trying to gain efficiencies through streamlining. A lot of positives are being added: a local section seven days a week, a stand-alone business section every day and the successful technology section from the South Bay being brought up to the East Bay," Mac Tully, president of the Bay Area News Group told the Chronicle yesterday.

It will be nice that the same communities that had their own seven day a week newspaper will now have a seven day a week local news section, huh? (Yeah, that's snark.) And that office that once housed Lesher Communications in Walnut Creek will be closed, effectively vacating the entire county to whoever comes in next.

But wasn't this inevitable? Yes, just like it will be inevitable that New Media companies spring up to feed on the carcass of the Bay Area newspapers. With reduced staff sizes being imposed on already reduced staff sizes, there will be plenty of room for new local digital products.

And while the company says they want to concentrate on its digital offerings, one look at their first iPad effort is enough to convince you that don't really mean it.

Yes it is sad when local communities lose their local newspapers. But the reaction online to this news is either a yawn or an "adios". The reading public wasn't enamored with what had happened to these newspapers under MediaNews Group ownership and so are hardly lamenting their demise. For many readers, what is left of these papers will be simply coupon delivery devices.

Ironically, I think this may truly spur media growth in the Bay Area. Think about what MediaNews has just said: we can not make money in the news business serving some of the nation's wealthiest communities – Silicon Valley including the Palo Alto area, Pleasanton and the rich San Ramon Valley. Give us a gold mine and we will turn it into a dust bowl.